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US slaps China steel imports with fivefold tax increase

DA60

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'The US has raised its import duties on Chinese steelmakers by more than fivefold after accusing them of selling their products below market prices.
The taxes of 522% specifically apply to Chinese-made cold-rolled flat steel, which is used in car manufacturing, shipping containers and construction.
The US Commerce Department ruling comes amid heightened trade tensions between the two sides over several products, including chicken parts.
Steel is an especially sensitive issue.
US and European steel producers claim China is distorting the global market and undercutting them by dumping its excess supply abroad.
The Commerce Department also levied anti-dumping duties of 71% on Japanese-made cold-rolled steel.

The ruling itself is only directed at what is a small amount of steel from China and Japan and won't have much of an impact - but it is the politics of the ruling that's worth noting.'

US slaps China steel imports with fivefold tax increase - BBC News



Thoughts?
 

DA60

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My thoughts are...'uh ohhhhh'.

If this is more then just election year posturing, this could eventually get very ugly for everyone who is not rich.

Hopefully it is just posturing though.
 

joG

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'The US has raised its import duties on Chinese steelmakers by more than fivefold after accusing them of selling their products below market prices.
The taxes of 522% specifically apply to Chinese-made cold-rolled flat steel, which is used in car manufacturing, shipping containers and construction.
The US Commerce Department ruling comes amid heightened trade tensions between the two sides over several products, including chicken parts.
Steel is an especially sensitive issue.
US and European steel producers claim China is distorting the global market and undercutting them by dumping its excess supply abroad.
The Commerce Department also levied anti-dumping duties of 71% on Japanese-made cold-rolled steel.

The ruling itself is only directed at what is a small amount of steel from China and Japan and won't have much of an impact - but it is the politics of the ruling that's worth noting.'

US slaps China steel imports with fivefold tax increase - BBC News



Thoughts?

The Europeans are having a larger problem with their steel producers, if I remember correctly. It will be interesting to follow this.
 

Reformedfindlay

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I think it's despicable. Tariffs are inherently bad.

It's contrary to a free and competitive global market.
 

OrphanSlug

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What we need to keep in mind here is Steel as a product is already under trade distortion because of World Trade Organization rules *and* our prior trade agreements specifically with China. It was never really open and completely market driven trade anyway. To complain that tariffs are a problem means ignoring that the trade of steel has not been open and pure supply and demand driven for decades now, that ends up a bull**** argument.

This is economic distortions with respect to international trade of a product made in multiple nations in a controlled mechanism between nations. That makes it somewhat driven by competition but with caveats on conditions for moving this commodity internationally. We also should not discount that everything from raw materials, to localized labor rates, to percentage of domestic usage to international trade by nation impacts these agreements.

So technically the story is right. The US / European nations assumed one balance of trade for this product, China's economic growth slows down, so they turn around and up the percentage of "cold-rolled steel" on the international market that they would have consume domestically. Because of cost imbalance favoring China in labor and materials, it ends up putting the price squeeze on US / European nations steel industry. So we end up with a punishment tariff because conditions of controlled trade changed without much notice (other than economic news notice.)

Worse, this is now a political issue as well. We should not fool ourselves here, the politics of economics and trade policy usually ends up discarding basic economics and "good" trade for any product. This issue will pass and new agreements, or understandings, between China and the US / European nations will be established... eventually. The question becomes how much more should we expect China to dump onto the international market and what is done in trade agreements to protect whatever is left of the US / European nation steel industries. In the end western production of really anything usually losses, I do not think it will be any different in this case. We should be prepared for that, we cannot compete with China on a pure open market condition anyway.

BTW... TPP would not have fixed this. It would have only created another barrier of trade controls and international conflict resolution (i.e. committees and potentially the courts in a host nation) for everyone to contend with. We saw it with NAFTA, TPP will generate the same thing.
 

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IMO we should be producing and/or recycling steel HERE in the USA rather than shipping "waste" steel to China for recycling and buying steel from them.

Our economy needs to become more diverse, with a stronger heavy industry rather than being so dependent on overseas producers.
 

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IMO we should be producing and/or recycling steel HERE in the USA rather than shipping "waste" steel to China for recycling and buying steel from them.

Our economy needs to become more diverse, with a stronger heavy industry rather than being so dependent on overseas producers.

The problem seems to be that you loose money on it quite often and that producing it in the US is too costly.
 

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I think it's despicable. Tariffs are inherently bad.

It's contrary to a free and competitive global market.

Tariffs are bad only for those who don't care for fair trading. It is about time someone is taking a stand. The free global market benefits the greedy, while the poor are further send into the abyss, having to resort to accepting cheaper useless crap.
 

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What we need to keep in mind here is Steel as a product is already under trade distortion because of World Trade Organization rules *and* our prior trade agreements specifically with China. It was never really open and completely market driven trade anyway. To complain that tariffs are a problem means ignoring that the trade of steel has not been open and pure supply and demand driven for decades now, that ends up a bull**** argument.

This is economic distortions with respect to international trade of a product made in multiple nations in a controlled mechanism between nations. That makes it somewhat driven by competition but with caveats on conditions for moving this commodity internationally. We also should not discount that everything from raw materials, to localized labor rates, to percentage of domestic usage to international trade by nation impacts these agreements.

So technically the story is right. The US / European nations assumed one balance of trade for this product, China's economic growth slows down, so they turn around and up the percentage of "cold-rolled steel" on the international market that they would have consume domestically. Because of cost imbalance favoring China in labor and materials, it ends up putting the price squeeze on US / European nations steel industry. So we end up with a punishment tariff because conditions of controlled trade changed without much notice (other than economic news notice.)

Worse, this is now a political issue as well. We should not fool ourselves here, the politics of economics and trade policy usually ends up discarding basic economics and "good" trade for any product. This issue will pass and new agreements, or understandings, between China and the US / European nations will be established... eventually. The question becomes how much more should we expect China to dump onto the international market and what is done in trade agreements to protect whatever is left of the US / European nation steel industries. In the end western production of really anything usually losses, I do not think it will be any different in this case. We should be prepared for that, we cannot compete with China on a pure open market condition anyway.

BTW... TPP would not have fixed this. It would have only created another barrier of trade controls and international conflict resolution (i.e. committees and potentially the courts in a host nation) for everyone to contend with. We saw it with NAFTA, TPP will generate the same thing.

Good post. You mentioned the WTO and its rule son steel. Do we know if this tariff compliant with those rules or not? If I recall, the last time the US put a tariff on steel, during Bush 2's admin, the WTO took a year or so to decide and demand that it needed to be vacated. Wonder if it's the same scenario now.
 

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I think it's despicable. Tariffs are inherently bad.

It's contrary to a free and competitive global market.

That is textbook true. The thing seems to be that the travers back to full employment and to better production is not so smooth and leaves lots of people in much worse jobs than they had. That would correct itself over a medium term, but people live now.
 

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Good post. You mentioned the WTO and its rule son steel. Do we know if this tariff compliant with those rules or not? If I recall, the last time the US put a tariff on steel, during Bush 2's admin, the WTO took a year or so to decide and demand that it needed to be vacated. Wonder if it's the same scenario now.

Unfortunately, there is some gray area in this.

As I understand it the trade levels are not necessarily absolutes. Both the World Trade Organization (WTO) and Organization for Economic Co-operation and Development (OECD) claim that China has purposefully flooded the market with cold-rolled steel for sometime now, and they have also gone after nations like India, South Korea, and Taiwan for the same reasons. The problem with China specifically though is they are still listed as a "non-OECD economies" because they walked away from the negotiation table at that organization for this product specifically. China is still increasing their production of this product but using less of it internally.

So really what you have here is a convoluted mess. China is not participating in OECD negotiations thus their flood of this product does not violate those specific deals, but they may be in violation with WTO agreements in a general sense. The US responding with a trade tariff may put them in violation with OECD in a general sense but not with China specifically (again, they walked away) and the US may be in trouble with the WTO who tends to look harshly on sudden changes to trade policy via sharp tariffs use or increases in fine for any reason. The WTO would rather negotiate a deal between disputed nations, which is in itself control.

To make matters even worse this is bound to end up a discussion point at the next G7 where the US will probably ask the other nations involved (Canada, France, Germany, Great Britain, Italy, Japan, and us) to come up with their own tariffs for China steel products, perhaps as back up to other negotiations on how much the G7 nations still produce in competition. Some will perhaps agree with us, but I bet others like Italy and Germany may not.

The biggest issue here is regardless of these deals and trade agreements, China has a vested interest in continuing to shift from internal usage of these products (because of economic slow down) to international sale because of their price advantage from labor costs and raw materials costs. India may follow suit but they have less room to maneuver here, so it comes down to how everyone else responds which may result in a trade war. The bigger question is what other products and services get caught up in the melee because of Steel products China is trying to corner in a manner similar to how Saudi Arabia changed the direction of oil prices for at least the next several years.
 

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Unfortunately, there is some gray area in this.

As I understand it the trade levels are not necessarily absolutes. Both the World Trade Organization (WTO) and Organization for Economic Co-operation and Development (OECD) claim that China has purposefully flooded the market with cold-rolled steel for sometime now, and they have also gone after nations like India, South Korea, and Taiwan for the same reasons. The problem with China specifically though is they are still listed as a "non-OECD economies" because they walked away from the negotiation table at that organization for this product specifically. China is still increasing their production of this product but using less of it internally.

So really what you have here is a convoluted mess. China is not participating in OECD negotiations thus their flood of this product does not violate those specific deals, but they may be in violation with WTO agreements in a general sense. The US responding with a trade tariff may put them in violation with OECD in a general sense but not with China specifically (again, they walked away) and the US may be in trouble with the WTO who tends to look harshly on sudden changes to trade policy via sharp tariffs use or increases in fine for any reason. The WTO would rather negotiate a deal between disputed nations, which is in itself control.

To make matters even worse this is bound to end up a discussion point at the next G7 where the US will probably ask the other nations involved (Canada, France, Germany, Great Britain, Italy, Japan, and us) to come up with their own tariffs for China steel products, perhaps as back up to other negotiations on how much the G7 nations still produce in competition. Some will perhaps agree with us, but I bet others like Italy and Germany may not.

The biggest issue here is regardless of these deals and trade agreements, China has a vested interest in continuing to shift from internal usage of these products (because of economic slow down) to international sale because of their price advantage from labor costs and raw materials costs. India may follow suit but they have less room to maneuver here, so it comes down to how everyone else responds which may result in a trade war. The bigger question is what other products and services get caught up in the melee because of Steel products China is trying to corner in a manner similar to how Saudi Arabia changed the direction of oil prices for at least the next several years.

Another good post. That's 2 in a row. You are on a hot streak. :)

Yeah, OK. It's a mess.

If China wants to continue to sell to the world, they are going to have to join the WTO and the OECD, if only to keep the playing field more level. Should the multiple nations impacted by China's steel dumping come to a concerted plan of action, this might be the nudge required. I'm sure those nation's steel industry are crying foul, and right fully so, in my view.
 

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'The US has raised its import duties on Chinese steelmakers by more than fivefold after accusing them of selling their products below market prices.
The taxes of 522% specifically apply to Chinese-made cold-rolled flat steel, which is used in car manufacturing, shipping containers and construction.
The US Commerce Department ruling comes amid heightened trade tensions between the two sides over several products, including chicken parts.
Steel is an especially sensitive issue.
US and European steel producers claim China is distorting the global market and undercutting them by dumping its excess supply abroad.
The Commerce Department also levied anti-dumping duties of 71% on Japanese-made cold-rolled steel.

The ruling itself is only directed at what is a small amount of steel from China and Japan and won't have much of an impact - but it is the politics of the ruling that's worth noting.'

US slaps China steel imports with fivefold tax increase - BBC News



Thoughts?

Wait a minute, isn't the Left having a cow over Trump supporting this sort of thing? Who's the President?
 

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I don't get it; if China wants to subsidize steel for US and Europe, what's the problem? China gets some, rather than no, money for their excess product, and the West gets cheaper steel. Everybody wins, everybody is happy.
 

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IMO we should be producing and/or recycling steel HERE in the USA rather than shipping "waste" steel to China for recycling and buying steel from them.

Our economy needs to become more diverse, with a stronger heavy industry rather than being so dependent on overseas producers.

It's pretty damn diverse already.
 

DA60

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I don't get it; if China wants to subsidize steel for US and Europe, what's the problem? China gets some, rather than no, money for their excess product, and the West gets cheaper steel. Everybody wins, everybody is happy.

The problem, as I see it, is that if this is not just election year posturing, but the start of large trade sanctions...then we could be looking at the beginnings of a trade war.

And that would mean huge increases in the price of almost everything eventually.

Just Google Smoot-Hawley and see what economic havoc was wreaked the last time America embarked on a trade war.
 

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The problem, as I see it, is that if this is not just election year posturing, but the start of large trade sanctions...then we could be looking at the beginnings of a trade war.

And that would mean huge increases in the price of almost everything eventually.

Just Google Smoot-Hawley and see what economic havoc was wreaked the last time America embarked on a trade war.
Yes, I was questioning the tariffs since China is doing the West a favor by subsidizing steel.
 

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Yes, I was questioning the tariffs since China is doing the West a favor by subsidizing steel.

i can see why it would appear that way upon first blush
why buy domestic steel when we can get it so much cheaper from the chinese manufacturers

but then, if we have a military situation, where we need to manufacture a lot of armaments
and look around to find we have no steel industry, because it died when we bought chinese steel instead of the domestic product
 

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i can see why it would appear that way upon first blush
why buy domestic steel when we can get it so much cheaper from the chinese manufacturers

but then, if we have a military situation, where we need to manufacture a lot of armaments
and look around to find we have no steel industry, because it died when we bought chinese steel instead of the domestic product
IF that unlikely event happens, then the US can ramp up production. It happened at the start of ww2, no reason it couldn't happen again.
 

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It's contrary to a free and competitive global market.

The Chinese have screwed "free-trade" in their favor since the get-go.

There is no such thing as "free-trade". It exists nowhere on earth, given the pattern of trade-tariffs that exist.

And when China reduces prices simply to keep furnaces operating (because they cost so damn much to shut down and then re-fire when necessary), they make a mockery of "trade-fairness" ...
__________________________
 

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THE BATTLE HAS JUST BEGUN

EU imposes new tariffs on Chinese steel imports

Excerpt (January 29, 2016):
The European Union has signaled a tougher approach to the bloc’s growing steel industry crisis announcing the imposition of a new range of tariffs on Chinese imports on Friday, according to a notice in the Official Journal.

The move, which comes amid an ongoing EU investigation into possible anti-dumping measures, will cover steel bar used in construction. The provisional tariffs will range from 9.2 per cent to 13 per cent

U.S. Imposes 266% Duty on Some Chinese Steel Imports

Excerpt (March 1, 2016):
The Department of Commerce Tuesday imposed preliminary duties on imports of cold-rolled steel, used to make auto parts, appliances and shipping containers, from seven countries including China, whose steelmakers were slapped with a massive tariff.

The duties, set at 265.79% for Chinese steelmakers, will be imposed within the next week but must still be confirmed in a final determination scheduled for this summer. They are meant to punish dumping, or selling below cost. to improperly gain market share. Chinese officials have denied the practice.

After enduring one of their worst downturns ever, American steelmakers are now counting on tariff protection to help ride out a weak market. A slowdown in the steel-heavy oil-and-gas industries combined with a boom in Chinese exports has deflated steel prices around the world.

Chinese government imposes tariff on EU steel imports

Excerpt (1 April 2016):
China’s move is likely to anger UK steelworkers and unions, who blame the country for much of the industry’s recent troubles

China has risked raising tensions over its role in the UK steel crisis by imposing a 46% import duty on a type of high-tech steel made by Tata in Wales.

The Chinese government said it had slapped the tariff on “grain-oriented electrical steel” imported from the European Union, South Korea and Japan. It justified the move by saying imports from abroad were causing substantial damage to its domestic steel industry.

Tata Steel, whose subsidiary Cogent Power makes the hi-tech steel targeted by the levy in Newport, south Wales, was unable to say on Friday whether any Cogent products are exported to China.

News of the tariff emerged as David Cameron confronted the Chinese president, Xi Jinping, on the sidelines of a summit dinner in Washington on Thursday night, urging him to use Beijing’s presidency of the G20 group of leading countries to tackle the problem.

Seems like this is only the beginning in a long, drawn-out process regarding steel exports? and the battle has just begun ...
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Reformedfindlay

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The Chinese have screwed "free-trade" in their favor since the get-go.

There is no such thing as "free-trade". It exists nowhere on earth, given the pattern of trade-tariffs that exist.

And when China reduces prices simply to keep furnaces operating (because they cost so damn much to shut down and then re-fire when necessary), they make a mockery of "trade-fairness" ...
__________________________

What is "Trade-fairness."

Sounds dumb as hell. Free trade doesn't have to be fair. Those who win will win.
 

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If China wants to continue to sell to the world, they are going to have to join the WTO and the OECD, if only to keep the playing field more level.

China is already a member of the WTO since 2001.

And, from the WTO: DISPUTE SETTLEMENT: DISPUTE DS252
United States — Definitive Safeguard Measures on Imports of Certain Steel Products


The above complaint was deposited at the WTO in 2002.

China has recently deposited a complaint against the US for its steel tariffs: China complains to WTO that U.S. fails to implement tariff ruling

My point: It goes on and on and on. The only resolution will be the return to "normal" of Global Trade entirely. Till then expect China to do absolutely nothing about their low steel prices. They are just stalling ...

What we could do is stop buying their steel, but then pay higher costs of the new cars we buy. And we Americans are not about to do that, are we?

We can't have it both ways ...
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justabubba

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What is "Trade-fairness."

Sounds dumb as hell. Free trade doesn't have to be fair. Those who win will win.

fair trade is leveling the playing field within your own nation's market

allowing a foreign manufacturer to create a goods not subject to labor and environmental limitations and then selling those goods in your market at a lower price because of those eliminated barriers of manufacture, places your domestic manufacturer at a competitive disadvantage within your own market
 
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